The Saluki Company specializes in making fraternity and sorority T-shirts for the college market. Due to the high setup costs for each batch printed, Saluki holds the T-shirt requests until demand is approximately 100 shirts. At that point Saluki will schedule the setup and production of the shirts. For rush orders, Saluki will produce smaller batches for an additional charge of $175 per setup. Budgeted and actual costs for the production process for 2017 were as follows: Static-Budget Amounts Number of shirts produced Average number of shirts per setup Hours to set up machines Direct variable cost per setup-hour Total fixed setup overhead costs Actual Results 114,000 95 5.20 2$ $56,000 125,000 $ 30 32 $56,250

Q: Define sales volume variance.

A: Sales volume variance (also known as sales quantity variance) occurs when the actual quantity of…

Q: A graph that provides a visual representation of the relationship between total cost and activity…

A: The scattergraph provides a visual depiction of how changes in one variable may be connected to…

Q: Which do you think is more important for controlling fixed overhead costs: the spending variance or…

A: (This is not a subjective matter of opinion but rather is based on accounting principles and theory…

Q: Explains the effect on profit of using variable (marginal) and absorption costing.

A: The income statement can be prepared using various methods as absorption costing and variable…

Q: Explain how a scatter graph is used to identify and measure cost behavior.

A: A Scatter graph is a graphical tool that plots activity level on the x-axis and matches total cost…

Q: significant of variance analysis in cost management.

A: Variance analysis is a tool in cost management to compare and analyze variations in budgeted costs…

Q: What is the overall variance in overhead?

A: Overhead refers to secondary expenditures spent during the manufacturing and distribution of…

Q: Contribution margin is the difference between total revenue and total variable costs. Select one: O…

A: The contribution margin is calculated by subtracting total variable costs from total revenue. The…

Q: Describe management’s use of absorption and variable costing.

A: Absorption costing is also known as Full absorption costing. It is one of the managerial accounting…

Q: Summary, identify and relate the concepts of costs variable, step-variable, fixed, step-fixed,…

A: Answer:-  Cost meaning:- Cost is the sum money that a business spends on the development or…

Q: Identify the costs included under variable costing.

A: The costs can be distinguished as variable and fixed costs.

Q: In the cost equation TC = F + VX, “V” is best described as the:    Multiple Choice   intercept…

A: The objective of the question is to identify the correct description of 'V' in the cost equation TC…

Q: Define direct material variance.

A: Variance:   Variance refers to the difference level in the actual cost incurred and standard cost.…

Q: Explain and describe the overhead variance.

A: Variance means when the actual cost does not match with the estimated costs. To compute the…

Q: Which method is used to see if a relationship between the cost driver and total cost exists?…

A: Cost drivers means activity units that will cause change in total cost for example, number of…

Q: Define fixed overhead variance.

A: Fixed Overhead Variance is the difference between actual and absorbed fixed production overheads…

Q: Describe how total variable costs and unit variable costs behave as the level of activity increases?

A: Variable cost varies with the changing level of activity i.e. if the activity increases the variable…

Q: Understand thedifferences between variablecosts and fixed costs.

A: Fixed costs are those costs which remain fixed regardless of output but variable costs are those…

Q: what are the possible causes of favourable Labour efficiency variance

A: The capacity to employ labor in a manner that is consistent with expectations is what the labor…

Q: Assume the variance is material, what is the adjustment of the cost of good sold

A: Solution: Adjustment cost of goods sold vary based on variance in material or immaterial.

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance. 

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.